Kerala High Court
K.J. Thomas vs Commissioner Of Income-Tax on 14 January, 2008
Equivalent citations: [2008]301ITR301(KER)
Author: C.N. Ramachandran Nair
Bench: C.N. Ramachandran Nair, T.R. Ramachandran Nair
JUDGMENT C.N. Ramachandran Nair, J.
1. The judgment of the court was delivered by C. N. Ramachandran Nair J.-The common question raised in both the appeals is against the disallowance of interest in the computation of income from a theatre by name "Pandyan Theatre" in which the appellant was a partner. It is seen from the orders produced that the disallowance was made following an earlier order of the Tribunal. However, learned Counsel for the appellant contends that the disallowance of interest was made in the earlier year because the theatre was under construction. However, according to the appellant, the construction of the theatre was completed and the appellant started earning income during the previous year relevant to the two assessment years, viz., 1990-91 and 1991-92 against which these appeals are filed. It is seen that the interest paid is in excess of the income returned.
2. Consequently, the income from the firm is a loss and we see no reason why the appellant did not return a loss. In any case, the factual distinction stated by the appellant's counsel before this Court is not seen considered by the Tribunal. The appellant's computation statement of the income is also not available in the records. We do not think we can assume any facts which are not on record and decide the appeals if the factual basis on which the Tribunal disallowed the claim was wrong. It was for the appellant to have brought the facts on record at the time of argument before the Tribunal. We, therefore, leave open the said issue for the appellant to make a rectification application before the Tribunal, if the same is otherwise maintainable. However, since the time for making rectification application is over on account of the pendency of these appeals, the appellant is granted one month's time from the date of receipt of a copy of this judgment, to make a rectification application and if such an application is filed, the Tribunal shall entertain the same as one filed in time and dispose of the same on the merits.
3. Accordingly, we dismiss both the appeals on the common issue giving opportunity to the appellant to file rectification application.
In I.T.A. No. 12/2001, the second question raised is validity of the reassessment completed under Section 147 of the Income-tax Act on the ground that no notice was issued under Section 143(2) of the Act. It is conceded that the assessment originally completed was reopened by issuing notice under Section 148 of the Act and revised under Section 147 of the Act. It is conceded that notice under Section 148 of the Act was issued within the time prescribed under Section 149 of the Act and reassessment was also completed within the time limit prescribed under Section 153 of the Act
4. However, the appellant's case is that after issuing notice under Section 148 of the Act, the assessment has to be completed in accordance with the procedure contemplated under the Act. Therefore, notice under Section 143(2) of the Act was mandatory, which, according to the appellant, was not issued to him. Learned Counsel for the appellant has also referred to a judgment of the Madras High Court in CIT v. M. Chellappan .
Learned senior counsel appearing for the respondent submitted that notice under Section 143(2) of the Act was issued to the petitioner on December 12, 1994, and the petitioner had in fact filed a reply to the same and appeared for hearing pursuant to another notice issued on February 23, 1996. The appellant himself had produced annexure A-I which is the reply filed by him pursuant to the details called for by the Assessing Officer. It is seen from annexure A-I that the entire questions raised and considered in the reassessment was answered by the assesse.
5. However, the assessee has written in paragraph 7 of the said reply that he was not issued any notice under Section 143(2) of the Act. In the normal course, a detailed reply in this nature is furnished only after issuing a notice under Section 143(2) of the Act. In any case, we find that after the assessee filed annexure A-I reply, no further notice is required, because reply was already filed by the appellant. The procedure under Section 143(2) of the Act is to ensure that an adverse order is issued only after proper opportunity is given to the assessee. In this case, it is conceded that the assessee got opportunity to file reply and detailed reply was in fact filed and the reassessment notice and the final order were also issued within the time limit prescribed under the Act.
6. Therefore, we do not find any ground to interfere with the order of the Tribunal on the ground that written notice was not issued to the assessee before completion of assessment under Section 143(2) of the Act.
Consequently, I. T. A. No. 12 of 2001 is dismissed.